As a home buyer, you need to keep your credit score high (above 700) in order to qualify for the best mortgage loan terms. People who use good financial practices in their daily lives will save thousands of dollars in interest fees during their lifetime. Following are some ways to manage your credit score:
Credit Report - Go to annualcreditreport.com once a year and print off a copy of your report. If you find errors correct them immediately.
Pay Credit Card Bills – If possible, pay off your total credit card bill monthly. This is one of the best ways to improve your credit score. Transferring credit card debt from one card to another card will likely lower your credit score.
Credit Card Max – Do not charge to the maximum limit allow by your credit card. Keep what you charge less than 30% than what is allowed by the credit card, otherwise, your credit score will go down.
Applying For Mortgage – Recommend waiting at least 12 months after resolving credit problems before applying for a mortgage loan. You will be penalized less.
Don’t Make Major Purchases – Just prior to getting a mortgage loan approval, and during the home buying process do not make any major purchases. Be sure to wait until after closing to make these purchases, otherwise, this may damage your income-to-debt ratios, and may cause you not to be able to purchase home.
Mortgage Shopping – Do not shop for home mortgage loans over a long period of time. Do your shopping within a 30-day window to prevent unnecessary reductions in your credit score.
Credit Card Accounts – When applying for a mortgage loan do not apply for additional credit cards. This will lower your credit score.
Finance Companies – Avoid finance companies, this is an indicator of poor financial management.
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